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Joes Crab Shack tests no-tipping policy
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Joes Crab Shack has begun testing a no-tipping policy at 18 of its 130 locations across the U.S. making it the first major chain to do so. - photo by Jessica Ivins
HOUSTON A popular restaurant chain is telling its customers to hold the tip.

Joes Crab Shack has begun testing a no-tipping policy at 18 of its 130 locations across the U.S. making it the first major chain to do so, according to ABC News. To compensate, servers wages will go up from the federal hourly standard of $2.13 to around $12 to $14 an hour.

Additionally, customers will see a 12- to 15-percent hike in menu prices, depending on the location, CNN reports. Thats less than the typical 20 percent tipping rate many customers abide by.

Ultimately, people are paying less and hopefully we are delivering more value, Ignite Restaurant Group CEO Raymond Banchette told CNN. Its one of the reasons we are testing, to make sure people are judging the total experience and not just menu price.

The chain first began implementing the no-tip test at select locations in August eliminating the tip line from credit and debit card receipts and placing signs notifying customers of the new policy. Theres no real timeline yet on a company-wide rollout, but Blanchette said the goal is to ultimately lower the cost of labor and save the company money, according to CNN.

Joes has been struggling of late. The chains sales dipped 6.6 percent in the third quarter, according to CNBC. Blanchette pointed to another concern: High turnover rates among staff. Thats something he said he hopes will change with more stable wages.

Its expected to result in an improved team atmosphere, a significant reduction in turnover and greater financial security for employees, Blanchette said in an earnings' call last week.

While Joe's Crab Shack is the first big chain to make a move in support of the so-called no-tip movement, it follows the lead of the Union Square Hospitality Group, which made waves last month when it announced plans last to eliminate tipping at all 13 restaurants in New York City by the end of 2016, ABC reports.